Portugal backs 100 pct auctioning for power sector

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The European Union's carbon trading scheme allocates emissions permits to heavy industrial sectors such as metals, paper and power generators, and is the bloc's main weapon against climate change.

NUSA DUA, Indonesia (Reuters) - Portugal supported 100 percent auctioning of carbon emissions permits to its power sector in the third trading cycle of Europe's emissions trading scheme from 2013, a senior Portuguese official said on Thursday.

The European Union's carbon trading scheme allocates emissions permits to heavy industrial sectors such as metals, paper and power generators, and is the bloc's main weapon against climate change.

Until 2012 power generators will get most permits for free, but they are passing this cost on to electricity consumers anyway, handing themselves windfall profits worth some 20 billion euros ($29.43 billion) annually, analysts say.

Portugal on Thursday advocated 100 percent auctioning to the power sector from 2013, a move which would wipe out such profits.

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"My own country Portugal favors 100 percent auctioning for the power sector for the next phase of the emissions trading scheme," said Nuno Lacasta, the head of Portugal's climate negotiating team at December 3-14 U.N. talks in Bali.

Germany has also said it supported more auctioning, and said it would use the resulting revenues to help fund adaptation to climate change in poor, vulnerable countries.

The subject of adaptation is high on the agenda in the Indonesian island of Bali, where some 190 countries are trying to launch negotiations to agree a successor climate change pact to the Kyoto Protocol after 2012.